Implications of New National Consumer Credit Regime on your business.
Post on 18-Dec-2015
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who needs to apply for an Australian Credit licence?
are there any other options? what needs to be done to apply for an
Australian Credit licence?
Daniels Bengtsson Pty Limited
Commonwealth take over of consumer credit replacing State & Territory regimes National Consumer Credit Protection Act , called
the Credit Act
comprehensive licensing regime for all businesses engaged in credit activities
ASIC the single, national regulator
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persons engaging in credit activities – initial registration with ASIC subsequent grant of Australian Credit licence
entry standards for registration & licensing registered persons and licensees to meet
ongoing standards of conduct gives ASIC the power to suspend or cancel
a licence or registration, or to ban an individual from engaging in credit activities
Daniels Bengtsson Pty Limited
main group affected industry participants – detailed under ‘credit
activities’
main impact – those who only conduct business in States or
Territories where there is currently no licensing or registration scheme
costs – one-off - applying for a licence complying with ongoing licence obligations
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pre 1 July 2010 credit activities
register between 1 April & 30 June
licence between 1 July & 31 December
post 1 July credit activities licence before you start engaging
in the credit activity
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pre 1 July 2010 credit activities
register between 1 April & 30 June
licence between 1 July & 31 December
post 1 July credit activities licence before you start
engaging in the credit activity
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a person continuing to engage in credit activities from 1 July 2010 without being registered
X cease engaging in credit activities until the credit provider obtains an ACL
a registered credit provider continuing credit activities from 1 January 2011 without being licensed
X cease engaging in credit activities until the credit provider obtains an ACL
Daniels Bengtsson Pty Limited
must not carry on credit activities unless – the credit activity is authorised –
in the person’s Australian Credit Licence
in transitional registration before licensing
an individual is – a credit representative of a licensee/registered
person
a director or employee of a licensee/registered person
activity or person exempt under the regs
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credit providers under credit contracts performing obligations, or exercising rights,
of a credit provider under a credit contract
providers of consumer leases
performing obligations or exercising rights in respect of credit contracts or mortgages & guarantees in relation to credit contracts
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‘credit activities’ involves credit contracts, leases, mortgages and guarantees where the National Credit Code applies to the provision of the credit
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debtor a natural person or strata corporation
credit provided wholly or predominantly for personal, domestic or household purposes to purchase, renovate or improve residential
property for investment to refinance credit provided in relation to above
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goods are hired wholly or predominantly for personal, domestic or household purposes
a charge is or may be made for the hiring of the goods & the charge, together with any other amount payable under the consumer lease, exceeds the cash price of the goods.
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continue to be a credit provider or lessor for as long as you continue to be a party to the contract – collecting money due enforcing contracts
obligation to stay licensed continues for the life of the contract implication for businesses that go into ‘run off’
ie no new lending after 1 July
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assignees of credit providers, lessors. mortgagees or beneficiaries of guarantees must be licensed because they – collect money enforce contracts, mortgages or guarantees
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persons providing credit service – finance brokers and other intermediaries where
they have a role in securing credit for a consumer
persons who assist consumers in relation to a particular credit contract with a particular credit provider
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you suggest that the consumer …
apply for a provision of credit in respect of a particular credit contract with a particular credit
apply for an increase to the credit limit of a particular credit contract with a particular credit provider
remain in their current credit contract or lease
Daniels Bengtsson Pty Limited
you assist the consumer to …
apply for a provision of credit in respect of a particular credit contract with a particular credit
apply for an increase to the credit limit of a particular credit contract with a particular credit provider
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you are providing credit assistance regardless of whether you are dealing directly with the consumer or with the consumer’s agent for example, you are assisting an elderly parent
to apply for a credit contract, but are dealing with their children [Explanatory Memorandum §1.24]
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it is enough to suggest - entry into a credit contract or lease applying for a credit limit staying in a particular credit contract
without actually arranging the contract assistance is less than ‘arranging’
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regulates every person who may be an intermediary between consumer & credit provider
‘Innovations in credit product design and delivery now mean that a consumer may pass through a number of hands between the first person they deal with and the lender, and may be uncertain as to the roles or functions of all these different parties. It is intended that the licensing requirements will apply to all these persons.’
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very wide – does not require conduct in relation to a
particular credit contract or credit provider does not require direct or indirect contact with
the consumer for example, acting as an intermediary by
preparing or passing on information but with the object, wholly or partly, of securing the provision of credit or a lease [Explanatory Memorandum §1.29]
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A person will commit an offence where – they hold out that they are authorised they hold out or advertise that they can engage
in credit activities they demand or receive a fee from a consumer
in relation to a credit activity, when they are unlicensed in relation to that credit activity
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licensee cannot conduct business with another person who is engaging in a credit activity but not licensed to do so – civil penalty – 2,000
penalty units criminal penalty –
200 penalty units + 2 years imprisonment
essential licensees understand who they are doing business with – what is their status –
licensed or exempt under the regulations
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conducting business with 3rd parties –
can you list some of the 3rd parties you deal with when you are engaging in credit activities?
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the regulations deal with exemptions in 3 ways - by exempting persons when engaging in certain
credit activities by exempting certain credit activities by exempting activities
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Bankruptcy Act 1966 official receiver or trustee, registered debt agreement administrator
receiver, receiver and manager, provisional liquidator, or liquidator
a State or Territory Public Trustee
administrator of a body corporate
deceased’s personal representative
deceased licensee’s personal representative but only for 6 months
a public or local government body or authority, constituted under Commonwealth, State or Territory legislation
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State-based registrations under –
the Finance Brokers Control Act 1975 (WA
the Credit (Administration) Act 1984 (WA)
the Consumer Credit (Administration) Act 1996 (ACT)
financial counselling service
body providing benefits to members
charities providing credit services to low income people
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lawyers tax agents but note - excluded from exemption
–
activity of tax agent providing a consumer with a certificate or assessment as to whether the consumer can meet their financial obligations under the contract: Reg 24(5)
performers of some statutory obligations – Privacy Act 1988 Anti-Money
Laundering and Counter-Terrorism Financing Act 2006
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a related body corporate of a licensee on behalf of that licensee only because its employees and directors are
engaging in credit activities on behalf of the licensee
the credit activities are not - being a credit provider under a credit contract
being in the business of providing consumer credit
being a lessor under a consumer lease
being in the business of providing consumer leases
Daniels Bengtsson Pty Limited
only when acting for a licensee -
to demand and receive payments from borrowers or guarantors under credit contracts or consumer leases
to enforce rights in relation to taking possession of property secured by a mortgage, or goods hired under a consumer lease
only if – licensed under
State/Territory legislation only if authorised in
writing by a licensee to engage in the activity
only until 10 March 2011
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acting for a licensee who is a –
credit provider lessor mortgagee person who is the
beneficiary of a guarantee
the activities are – selling, storing or
transporting property of a debtor, lessor, mortgagor or guarantor
giving or sending statutory notices or documents to a debtor, lessee, mortgagor or guarantor or guarantor
Daniels Bengtsson Pty Limited
the credit provider a linked credit provider
linked credit provider is a licensee
the consumer enters into the contract wholly or predominantly for the purposes of payment for the goods of services supplied by the supplier
does not apply to land
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example – Milo runs a retail business by arrangement with a
licence, brochures inviting consumers to apply for a particular credit card are made available to Milo’s customers
the licensee has prepared the
Milo refers customer’s inquiries to a phone number in the brochure.
Milo’s conduct is exempt if –
consumers are advised of the licensee’s’ licence number
a reasonable person would assume that the licensee (eg Amex, Visa, Mastercard) was the lender in respect of the credit card
Daniels Bengtsson Pty Limited
example – Milo supplies goods
through a website which advertises a link to a credit cards provider
Milo has specified the form and content of the advertisement
the advertisement includes a statement that inquiries should be addressed to the credit cards provider with contact details
Milo’s conduct is exempt if –
consumers are advised of the licensee’s’ licence number
a reasonable person would assume that the licensee (eg Amex, Visa, Mastercard) was the lender in respect of the credit card
Daniels Bengtsson Pty Limited
inquirer wants information about –
the cost, or an estimate of the likely cost, of a credit contract or a consumer lease
terms and conditions of a credit contract or a consumer lease
activity exempt if – provider has information
about a number of licensees but gives the inquirer information about only one licensee
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the activity is done in the course of work of a kind ordinarily done by clerks or cashiers
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the persons acts as an intermediary by giving the consumer contact information about a licensee or their representative
the person must disclose if they may receive a payment or potential financial benefit similar to the FSR ‘clerks & cashiers’ exemption
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ASIC must grant licence to a Credit Union licensed credit activities must match as
closely as possible what the Credit Union applied for
ASIC will issue Australian credit licence numbers
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commences 1 November 2011
regulations will specify the circumstances when you must cite the Australian credit licence number
will be the same number as a Credit Union’s Australian Financial Services licence number eg Australian Financial Services & Credit Licence
No 1234567
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alternative to licensing ensure that your business model is
appropriate ensure that you address the risk of
cancellation of the arrangement by the authorising licensee
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SAI Global’s Upcoming Risk Programs
Transitioning to the New Risk Management Standard – AS/NZS ISO 31000:2009 (1 Day)
Introduction to Risk Management – AS/NZS IOS 31000:2009 (1 Day)
Integrated Risk & Compliance Management (2 Days)
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